China aims to build its own Nasdaq

The Shanghai Stock Exchange has a total market capitalization of nearly $4 trillion, but is dominated by large, state-owned firms (source: dpa)

China’s small and technology firms have made big stock-market gains recently

The boards they are listed on, however, still are not fully fledged capital markets

Making these boards more accessible will allow China’s innovative firms to expand

But the likely outcome is only slow reform, at best

Small companies and technology firms listed on the two minor boards within China’s Shenzhen Stock Exchange (SZSE) have outperformed the big state-owned enterprises on the main boards of both the Shenzhen and Shanghai bourses in recent months. This may be a flash in the pan – or it may indicate that at long last these enterprises are starting to overcome institutional handicaps. The question is whether China can develop its exchanges into genuine capital markets that will allow these innovative firms to expand further, says GIS guest expert Ken Davies.

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